The Delhi High Court has strongly said that a global software vendor cannot suspend enterprise support to an Indian company by invoking EU sanctions, when the contract is governed by Indian law and both parties are Indian entities. The Court clarified that where an Indian contract between two Indian companies, performed in India and paid for in India, expressly designates Indian law as the governing law and subordinate foreign law in the event of conflict, the defendant cannot invoke unproven foreign sanctions (EU Council Regulation No. 269/2014) at the interim stage to suspend performance.
The High Court asserted that the agreements are not determinable contracts under Section 14(d) of the Specific Relief Act, 1963, and the plaintiff has established a strong prima facie case warranting an interim mandatory injunction to restore support services.
A Single Judge Bench of Justice Vikas Mahajan observed that the proper law governing all the agreements between the parties is the substantive domestic law of the Republic of India, as expressly stipulated under Clause 12.5 of the SAP General Terms and Conditions (GTC) and Clause 13.6 of the Delivered Support Agreement, both of which designate Indian law as the governing law and vest exclusive jurisdiction in the courts at New Delhi. Clause 12.5 of the GTC contains an express overriding provision stating that in the event of any conflict between foreign law and Indian law, Indian law shall prevail and govern.
The Court noted that EU Council Regulation No. 269/2014 is foreign law, which cannot be judicially noticed under Section 52(1) of the Bharatiya Sakshya Adhiniyam, 2023, and must be proved as a question of fact through expert evidence under Section 39 of the BSA. The expert opinions placed on record by both parties were found to be inadmissible as they were not supported by sworn affidavits, qualifications, or cross-examination, amounting to nothing more than ipse dixit. The Court further observed that Clause 12.4 of the GTC, which deals with regulatory matters and export control compliance, conspicuously omits the term ‘Support Services’, a defined term in the GTC, and therefore does not bring support services within the ambit of export control laws.
The Court noted that the Delivered Support Agreement is a separate and distinct arrangement for four third-party modules supplied through Avaali Solutions, with a minuscule fee of approximately Rs. 23 lakhs per year, as compared to the support fees of approximately Rs. 7.52 crores under the Order Forms for the year 2025. The Court observed that the worldwide territory of the licenses and support services, coupled with the admission that support is monitored across multiple time zones by resources based in Germany, the United States, and India, negates the defendant’s claim that services are exclusively routed through SAP SE in Germany.
The Court noted that the Order Forms are auto-renewing perpetual arrangements that do not confer any right on SAP India to terminate at will or on the basis of foreign sanctions. The Court observed that Clause 6.1 of the SAP Enterprise Support Schedule does not permit mid-term termination, but only allows termination at the end of the then-current support period upon three months’ written notice, and therefore does not amount to at-will termination. The Court noted that Clause 13.5 of the Delivered Support Agreement provides for termination only for a specific cause (embargo or trade sanction expected to last six months or longer), and not at will.
The Court observed that the Force Majeure clauses in both the GTC and the Delivered Support Agreement merely provide for extension of time, and not for outright termination or discharge of the contract. The Court further observed that the plaintiff’s challenge before the European Court of Justice (ECJ) was for annulment of the EU sanctions designation, whereas the present suit is for specific performance and injunction, and therefore the causes of action are distinct.
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Briefly, Nayara Energy Limited (formerly Essar Oil Limited), which operates a large-scale oil refinery and a network of retail fuel outlets across India, filed the suit against SAP India Private Limited and Avaali Solutions Private Limited (arrayed as a proforma party). The contractual relationship traces back to the SAP Software End-User Value License Agreement (EULA) dated Aug 17, 2004, under which SAP India granted non-exclusive perpetual licenses to Essar Steel India Limited and its authorised affiliates.
By an Assignment Agreement dated June 22, 2017, all rights under the EULA were assigned to Essar Oil Limited, which was later renamed Nayara Energy Limited. Three Order Forms were subsequently executed between the parties, all governed by the SAP General Terms and Conditions (GTC) and the SAP Enterprise Support Schedule. A separate SAP Delivered Support Agreement dated March 29, 2019, was executed for procuring four third-party modules through Avaali Solutions. The commercial implementation was managed through Annual Work Orders, with the last Work Order covering the period Jan 01, 2025, to Dec 31, 2025, having been duly paid by Nayara.
On 24.07.2025, Nayara was abruptly denied access to the SAP Support Portal, with SAP’s Global Export Control Team citing the plaintiff’s inclusion at serial no. 639 in Annexure-I of EU Council Regulation No. 269/2014 under Council Implementing Regulation (EU) 2025/1476 dated 18.07.2025. Page 6 On 02.09.2025, SAP India formally communicated the suspension, citing its obligation as an EU-headquartered company to comply with EU sanctions. Page 6 Nayara approached the Delhi High Court seeking restoration of access, hardware keys, SSCR keys, and SAP support services.
